Walsh Trading Daily Insights
Commentary
February Lean Hogs opened lower, rallied to the session high at 81.225, closing the breakdown gap from the low on December 3 at 81.20 to the high on December 6 at 80.925. With the gap closed, sellers took over and the market broke down to the low at 80.20. The breakdown took price just below support at 80.45. Hogs found support here and consolidated the rest of the session, settling at 80.75. A failure from settlement could see price re-test support at 80.45 and then 79.80. Support then comes in at 78.80. If settlement holds, we could test resistance at 81.70 and then the nearby 100 DMA at 82.00. Resistance then comes in at 83.325.
The Pork Cutout Index increased and is at 85.75 as of 12/10/2021.
The Lean Hog Index increased and is at 71.58 as of 12/09/2021.
Estimated Slaughter for Monday is 476,000, which is above last week’s 454,000 and below last year’s 491,000. Fridays and Saturday’s slaughter was revised lower to 466,000 and 235,000 respectively. The weekly estimated total for last week was revised lower to 2,570,000, which is below last week’s 2,657,000 and last year’s 2,755,000.
January Feeder Cattle continued its consolidation between support at 163.50 and resistance at 165.775. The low at 163.90 was above support and the high came in at 166.075, just above resistance. It settled at 165.525. If settlement holds, we could see a re-test of resistance at 165.775. A breakout above here could see price challenge resistance at 167.15. A failure from settlement could see price revisit support at 163.50.
The Feeder Cattle Index increased and is at 162.16 as of 12/10/2021.
February Live Cattle opened lower and broke down to the low of the day at 136.85. Buying came in and the market raced to the session high at 139.275. It consolidated the remainder of the day and settled at 138.85. Traders are trying to determine how aggressive packers will be in purchasing cattle for the short – slaughter week next week and what producers will put on the show-list this week knowing the holiday season is here. Trade will not likely take place till mid-week and I think futures volume will be light the rest of the year and volatility might increase because of that. We’ll see… A failure from settlement could see price re-test support at 137.875. Support then comes in at 136.35. If cattle can hold settlement, we could revisit resistance at 140.175.
Boxed beef cutouts were mixed as choice cutouts decreased 1.32 to 263.22 and select increased 1.40 to 253.64. The choice/ select spread narrowed to 9.58 and the load count was 127.
Monday’s estimated slaughter is 122,000, which is even with last week and above last year’s 119,000.
The USDA report LM_Ct131 states: So far for Monday negotiated cash trading has been at a standstill in all major feeding regions. Last week live purchases in the Southern Plains and Colorado traded at 140.00. In Nebraska last week live and dressed purchases traded from 138.00-140.00 and 220.00, respectively. For the prior week in the Western Cornbelt live and dressed purchases traded from 138.00-140.00 and 218.00-220.00, respectively.
The USDA is indicating no cash trades for live cattle and on a dressed basis (so far).
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursdays (except holiday weeks) and our next webinar will be on Thursday, December 16, 2021 at 3:00 pm. It is free for anyone who wants to sign up and the link for sign up is below. If you cannot attend live a recording will be sent to your email upon completion of the webinar.
**Call me for a free consultation for a marketing plan regarding your livestock needs.**
Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
Direct: 312.957.4163
888.391.7894
Fax: 312.256.0109
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